SW- Book Value per Share, Earnings per Share

Treasury Share & Share Split

Problem I- The following transactions affecting stockholders' equity of ABC Corporation
occurred during 2021:

2021
Jan. 1- Issued 10,000 shares of ordinary , par P100, for P110 per share.
1- Issued 2,000 shares of preference, par P50, for P55 per share.

Feb. 15- Reacquired for cash 3,000 shares of its ordinary for P115 per share.
20- Sold for cash 500 shares of its ordinary treasury stock at P125 per share.

March 5- Stockholders donated 1,000 shares of preference share capital to the corporation.
31- Sold for cash the treasury shares donated at P58 per share.

Apr. 10- Effected a stock split for ordinary of 2 for 1.(prepare an entry)

May 1- Converted all the preference share into ordinary shares on a share-per-share basis.

Dec. 10- 2,000 shares in the treasury were reissued at P60 per share.
- The remaining shares in the treasury were cancelled and retired.

31- The board of directors declared and paid P2 per share on outstanding shares.

Required:
a. Journal entries for the above transactions.

Book Value per Share

Problem II. The following are selected accounts on the books of ABC Company, December 31, 2021:

12% Preference share, P100 par

authorized 50,000 shares, issued 15,000 shares P1,500,000
Ordinary Share Capital, Par value P50,
authorized 200,000 shares, issued 90,000 shares 4,500,000
Share Premium- Ordinary 850,000
Share Premium- Preference 400,000
Retained Earnings 2, 960,000

The last dividend payment to preference shares was made on December 31, 2019.

Required: Compute the book value per share for each class of shares under each of the following
independent conditions:

1. Preference share is preferred as to assets, cumulative and has a liquidation value of P110 per share.
2. Preference share is preferred as to assets, non-cumulative and fully participating.
3. Preference share is preferred as to assets, cumulative and fully participating.

Earnings per Share

Problem III. ABC Company has 15,000 shares of 10% Preference Share capital, P50 par value; and
25,000 shares of Ordinary Share capital, P100 par value. The company’s Net profit is P250,000.
Compute the earnings per share under each of the following independent conditions:

1. Preference share is non-cumulative, no dividends were declared during the period.

2. Preference share is cumulative, no dividends were declared during the period.